With Baird's bull thesis on Acuity Brands, Inc. (NYSE: AYI) failing to materialize, the firm downgraded shares of the company. Specifically, the firm noted that the second-half volume improvement on which it had predicated its upgrade earlier this year hasn't materialized, with volumes decelerating further despite easier comparisons and industry pricing remaining difficult.

Analyst Timothy Wojs noted that the firm's fourth-quarter Lighting Survey of 22 lighting agents/distributors showed that overall volume rose 3 percent year over year, slowing from the 4-percent growth in the previous quarter.

"Growth particularly slowed in commercial and institutional verticals, with outdoor remaining more stable and controls remaining an area of relative strength," the analyst said.

Wojs also noted that all months within the fiscal year fourth quarter saw a net slowdown in demand, with the demand cadence not improving in September. Stung by low-cost competition and increased pricing aggressiveness by large OEMs, the analyst noted that overall pricing fell 5 percent, 150 basis point deterioration from the last survey.

The firm also said the volume and pricing outlook for 2017 were lowered, reflecting the continuation of recent trends through the rest of the year.

"While the timing's not ideal (AYI -9% vs. S&P over the past month), our checks point to additional market deterioration, lowering our conviction in meaningful growth acceleration and estimate upside in F2018, which we think keeps the stock range bound," the firm added.

Keeping in mind the recent stock underperformance/multiple compression, Acuity Brands' positioning and optionality around tier 3/4 solutions, the firm thinks an improving market is a prerequisite to drive multiple re-expansion. Until then, the firm said the stock could remain stuck in the recent trading range.

At time of publication, shares were trading down 7.34 percent at $155.51.